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UK Food Inflation Hits 11-Month High as Retailers Face Mounting Cost Pressures

Food prices rose 2.6% year-on-year in April, driven by increased employment costs, with further price hikes expected as new levies and legislation loom.

People queue for food in the financial district of Canary Wharf in London, Britain, May 18, 2022. REUTERS/Kevin Coombs/File Photo
The BRC-NielsenIQ index suggested that grocery costs could accelerate again in the coming months

Overview

  • Food inflation reached 2.6% in April 2025, the highest annual increase in 11 months, up from 2.4% in March.
  • Overall shop price inflation remained negative at –0.1% year-on-year, though deflation eased from –0.4% in March.
  • Rising costs for retailers include a £25 billion increase in employers’ National Insurance contributions and a 6.7% minimum wage hike effective in April.
  • A new packaging levy in October and the Employment Rights Bill are expected to add further cost pressures, with over half of HR directors planning hiring cuts.
  • The Bank of England forecasts headline inflation may peak near 3.7%–3.75% this summer due to rising household bills and business costs.